1-ARIYAPALA GUNARATNE v. THE PEOPLE’S BANK

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[1986] 1 SriL.R.
ARIYAPALA GUNARATNE
v.
THE PEOPLE'S BANK
SUPREME COURT.
SHARVANANDA. C.J., WANASUNDERA. J.. COLIN-THOME. J.. RANASINGHE. J.
AND TAMBIAH. J.
S.C. APPEAL No. 58/84.
A. No. 280/77 (F).
C. COLOMBO No. A/87/Z.
NOVEMBER 18. 19. 20 AND 21.1 985.
Fundamental rights-Freedom of association under Article 18(1) (f) of Constitution of1972- Violation by employers outside the State-Can requirement to resignmembership of Trade Union to qualify for promotion from Grade IV to Grade III ofservice in People's Bank be included in contract of employment? Article 126 of 1978Constitution.
The plaintiff was required to resign from membership of the Trade Union to which hebelonged to qualify for promotion from Grade IV to Grade III in the People's Bank. Herefused and filed a declaratory suit in the District Court.
Held-
The right of all employees (except a few prescibed categories) to voluntarily form unionsis part of the law of this land. It exists both in the Constitution and m statute form. Noemployer can take awa^this statutory right by imposing a term to the contrary in acontract of employment But of course where the State considers a restriction of thisright is necessary for good cause, it is enabled to do so by s 18(2) of the 1972Constitution. Such restriction can be imposed only by law and only for grounds set outin s. 18(2) and no other.
This right of association is of great value and has varied scope. It embraces associationswhich are political, social, economic and includes even such entities as clubs andsocieties. But trade unions enjoy pride of place. They play a significant role as anintegral part of the democratic structure of government, a*j are a part of thecontemporari^political and social landscapes. When Article 1 8( 1 )(f) of the Constitutionspeaks of the freedom of association, it means primarily the freedom of forming tradeunions. Restraints or limitations on it would be permitted only in the most exceptionalcircumstances and that would only be done by law in the interests of national security orin the interests of law and order etc.
The analysis of the law should be on the basis that the impugned acts or provisionsconstitute an invasion of fundamental rights and not on the basis that they fall withinthe exclusive domain of the private law of employment.
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The impugned clause in the proposed letter of employment is inconsistent with theguarantee of freedom of association contained in ration 18 (1) (f) of the Constitution of1972 and constitutes a matter of public law and not merely private rights.
Although the guarantee contained in section 18(2) is only against State action and notviolations by individuals the concept of State has been extended today to include almostany institution performing public functions. The People's Bank represented the plaintiffhere as part of the management. Within this function the People's Bank wouldconstitute the State or the Government within the meaning of s. 18 of the 1972Constitution for the purpose of enabling the maintaining of a declaratory action forviolation of fundamental rights under that Constitition.
The argument that the imposition of the impugned condition was valid under theConstitution of 1972 because existing law was kept alive by the Constitutionnotwithstanding inconsistency with the provisions relating to fundamental rights isuntenable. This argument is based on the wrong assumption that the law prior to thecoming into operation of the 1972 Constitution permitted an employer to include acondition of this nature in a letter of appointment. The right of employees to join unionsof their choice was there even before the Trade Unions Ordinance.
Cases referred to:
Me Auliffe v. New Bedford (1982) 155 Mass 216.
National Water Relations Board v. Laughlin Steel Corporation (1937) 301 U.S.1133.
Thomas v. Collins (1944) 323 U.S. 516.
Adler v. Board of Education! 1952) 342 U.S. 589.
Keyishian v. Board of Regents (1967) 385 U.S. 589.
United Public Workers' Ltd. v. Mitchell (1946) 330 U.S. 75.
U.S. Civil Service Commission v. National Association of Letter Carriers (1973)413 U.S. 548.
Broodrickv. Iklahoma (1973) 413 U.S. 600, 601.*
Ramakrishnaiah v. The President. District Court, Nellore A I R. 1952 Madras253.
Balakotaiah v. Union of India A.I.R. 1958 S.C. 812.
Ghosh v. Joseph A.I.R. 1963 S.C. 812.
State of Madras v. V. G. Row A.I.R. 1952 S.C. 196.
Shamdasani v. Central Bank of India A. I. R. 1952 S. C. 59.
Electricity Board, Rajasthan v. Mohan Lai A.I.R. 1967 S.C. 1857.
Sukhdos Singh v. Bhagat Ram (1975) 1 S.C.C. 421.
Shettyv. International Airport Authority (1979) 1 S.C.C. 489.
Son Prakesh R$khi v. Union of India (1981) 1 S.C.C. 449.*
AjavHasin v. K. M. Sehravardi (1981) 2 S.C.C. 66.
Wijeratnev. The People's Bank [ 1984] 1 S.L.R. 1.
APPEAL from judgment of the Court of Appeal.
Dr. Colvin R. de Silva with Prins Ranasooriya, Mervyn Cassie Chetty, Miss Saumya deSilva and A. Samarajeewa for the plaintiff-respondent-appellant.
Dr. J. A. L. Cooray with M. B. Peramune. K. Rampukpotha and Rohan Sahabandu fordefendant-appellant-respondent.
Cur. adv. vult.
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April 4. 1986.
WANASUNDERA, J.
The facts in this case are not in dispute. The Emergency Regulationswere in operation in this country from the beginning of 1971 due tothe insurrection and insurgency that threatened our country at thattime. Under those Emergency Regulations, service in the People'sBank (in which the appellant was employed as a Grade III officer in theBank Service) had been declared an "essential service" and this hadthe effect of prohibiting strikes. Notwithstanding those regulations, on1 st September 1972 the Ceylon Bank Employees' Union, a registeredtrade union of which the appellant was a member, called out itsmembership on strike.
On the next day. 2nd September 1972, the respondent Banknotified the strikers that they would be regarded as having vacatedtheir posts unless they returned to work by the 6th September, whichwas the deadline fixed by the Bank. The strikers paid no heed to thisnotice. Sometime later, on the 17th December, the Bank Employees'Union called off the strike and directed its members to resume workfrom the 18th December 1972.
When the appellant reported for work on the 18th. he was informedby the Bank authorities that he could only come in as a new entrant,for which he should make an application. The appellant had been inemployment with the Bank since 1961 and had been promoted toGrade III in 1964. On the appellant making such an application, he wasissued a letter of appointment (P3) to Grade VI m the Bank Service.The letter of appointment contained, inter alia, the followingconditions
"(3) Probation:
You will be on probation for a period of three nonths from thedate'of your taking up appointment in terms of this letter
(12) Prospects of Promotion:
On confirmation in your appointment you will be eligible forpromotion to higher grades in the Bank's service under theterms and conditions laid down by the Bank for such purposesfrom time to time and subject to the restriction on trade unionmembership as stated in para. 21 of this letter."
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Paragraph 21 is worded as follows:
»
"(21) Trade Union Membership:
The Bank does not give permission to its officers in Grade III andabove to be members of any trade union the membership ofwhich is open to employees in Grade V and/or equivalent oflower grades.- If you are or become a member of such a tradeunion, in order to qualify for promotion to Grade III Or any highergrade, you are and will be required to resign your membershipfrom such union and also undertake not to rejoin or become amember of such Union while being in the Bank's service in suchhigher Grade. However the Bank will have no objection to yourjoining at that stage a trade union, the membership of which isopen only to Bank Officers in Grade IV and/or equivalent orhigher grades."
The appellant was confirmed in his appointment with effect from18th May 1973. Thereafter, by letter P4 dated 10th April 1973. theBank informed the appellant that it had decided to promote him toGrade III but subject, inter alia, to the following conditions:-
"2. As stated in your letter of appointment, the Bank will notpermit the employees in Grade III and above to be a memberof any Trade Union the membership of which is open toemployees of Grade V and below.
If you are a member of such a Trade Union you should resignthat membership'before you get the proposed promotion andyou should give an undertaking that you will not holdmembership in any such Trade Union in the future as long asyou hold a post in Grade III or above.
If you accept this promotion on these conditions, pleasereturn tfle attached letter to me duly signed."
The appellant after considerable delay, perhaps after muchsoul-searching and after a reminder was sent to him, replied by D 9 of3rd August 1973 that he was not prepared to resign his membershipin the union of which he was a member. He was thereby staking hisfuture on his convictions. All the material events relating to this mattertook place during the existence of the 1972 Republican Constitutionand it is those provisions that govern this case.
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The appellant then came into court challenging the objectionableconditions restricting trad^union membership referred to earlier,stating that they were a contravention of his fundamental rights setout in section 18(1)(f) read with section 14 of the Constitution of1972 and were a negation and denial of the said fundamental rightsguaranteed to the appellant. In his plaint he prayed for a declarationthat clause 21 in P3 and clause 2 in P4 were null and void and that theappellant's promotion to Grade III is not subject to such conditions.The appellant claims the constitutional right of freedom of association.This means the right of-voluntary association, and not to have thatfreedom subjected to the dictation, behest or control of anyone else,particularly that of the employer. The proposed condition in the letterof employment is clearly a negation of that right because it preventsthe appellant joining or forming a union of his choice and his freedomof association is subjected to a measure of control by the employer.
In the lower court the learned District Judge held with the appellantand granted judgment in his favour In appeal the Court of Appeal hasreversed this judgment and dismissed the appellant's action withoutcosts.
The parties to this action had been at issue on three matters. First,whether the impugrjfsd clauses violate the appellant's fundamentalright granted under section 18(1)(f) of the Constitution? Second,whether the fundamental right guaranteed by the Constitution wasonly against violations by State action and not in respect of violationsby individuals such as the respondent? And third, whether in any eventthe existing law which prevailed immediately prior to the coming intooperation of the Constitution and which was continued by it permitsthe inclusion of a clause of this nature in a contract qj[ employment?e
The Court of Appeal disposed of the appeal on the first ground aloneas it was of the view that it went to the foundation of the appellant'saction. The Court held against the appellant on this issue. Dr. Colvin R.de Silva for the appellant in his careful analysis of the judgmentsubmitted that this judgment is based on a number of misconceptionsof the law on fundamental principles relating to this branch of the lawwhich were fatal to the judgment.
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The Court of Appeal has taken the view, that properly understoodthe impugned acts complained of do jgot attract the fundamentalrights relied on but on the contrary they fall within, the domain ofcontractual relations and are a matter of private law. The learnedjudge's reasoning is crystallised in the following passage from thejudgment:
"In my view it is necessary to draw a distinction between theexercise of the fundamental right of association on the one handand the right to employment on the other. While the former fallswithin the purview of the constitutional guarantees,, there is nofundamental right to employment or to a promotion in terms of acontract of employment. On an examination of the impugnedclauses, it seems to me that the true and real complaint of theplaintiff is that there is a denial or a restriction of his right to apromotion as a Grade III officer of the Bank. But the point is theplaintiff has no constitutional right to a promotion. Where a personfinds himself in a situation where he has to restrict his freedom ofassociation if he desires to obtain employment of a particular kind,he cannot both assert his constitutional right of association and atthe same time seek employment on his own terms. He has to makehis choice."
This passage which was the crux of the judgment came in forserious adverse comment from counsel for the appellant. Dr. Colvin R.de Silva stated that this was a completely erroneous formulation of thebasic issue involved and the result of a complete misreading of thecase law.
The learned judge has sought to support his reasoning by referenceto decisions from the U.S. and India. Dr. Cooray for the respondentrelied on them fb a great deal in supporting the judgmenj Relying onthese decisions, Dr. Cooray submitted that the fundamental right ofassociation invoked in this case is not absolute. He submitted that aperson who seeks employment cannot insist on working on his ownterms upon the supposed claim of a fundamental right. On thecontrary he has to abide by any reasonable terms laid down by theemployer in the interests of order and discipline and for the promotionof efficiency and integrity in the discharge of his duties.
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The learned judge has cited a judgment of Holmes. J. in Me Auliffev. New Bedford (1). This was a case where a policeman challenged aservice rule prohibiting th^ soliciting of monies for any politicalpurpose. Holmes. J. said:
"The petitioner may have a constitutional right to talk politics, buthe has no constitutional right to be a policeman. There are fewemployments for hire in which the servant does not agree tosuspend his constitutional right of free speech, as well as ofidleness, by the implied terms of his contract. The servant cannotcomplain, as he takes the employment on the terms which areoffered him."
While this general statement of this distinguished judge may beperfectly correct in so far as it states that there are many jobs which bytheir inherent nature require the holder to act in a particular way thatmay result in a limitation on his rights, including his fundamental rights.For example, a Cabinet Minister has to abide by the conventions andpractices relating to the Cabinet and the Cabinet system ofgovernment and this may affect his fundamental rights, like those offree speech. But this is not to say that every employer is free toimpose conditions in the contract of employment inconsistent with theguarantees of fundamental rights contained in the Constitution merelybecause he chooses to do so.
Dr. Colvin R. de Silv* also remarked that the judgment of Holmes. J.- a State Court judgment – is nearly a century old and there had beenmany developments in this field since then. In fact, in the materialsubmitted to us, we were shown a comment made on the abovequoted passage from Justice Holmes' judgment in an article in theHarvard Law Review, (1968) 81 Harvard Law Review 1439. Thelearned writer comments:
i
"That under appropriate circumstances one’s interest in hisgovernment job, his publicity financed home, his food stamp meals,or his state university educational opportunities may indeed beconsitutional rights in the positive-law sense ought no longer bedenied. Any. per se constitutional distinction which would excludegovernmental regulation of status in the public sector fromconstitutional review would, to steal a phrase from Mr. JusticeHolmes, reflect neither logic nor experience in the law."
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Further, the American courts stated that the right of employees toform themselves into unions is a well recognised right in all civilizedcountries. In the National Labour Relations Board v. Laughlin SteelCorporation (2). it was observed thaw •
"employees have as clear ^a right to organise and select theirrepresentatives for lawful purposes as a corporate employer has toorganise its business and select its own officers and agents.'"-Seealso Thomas v. Collins (3).
Adler v. Board of Education (4) to some extent reflects Holmes'position in the Me Auliffe’s case (supra) but the facts there indicatecertain exceptional circumstances. In Adler's case (supra) the courtupheld a provision of the New York Civil Service Law disqualifying fromthe civil service and the public school system any person, who"advocates, advises.or teaches" the overthrow of the government byforce or violence or who organises or joins any group advocating suchdoctrine in any organisation prescribed under the Feinberg Law of1949. This law empowered the State Board of Regents to list"subversive" organizations and membership therein was. prima facieevidence of disqualification.
Minton, J. speaking for the court said-"It is clear that (public school teachers) have the right toassemble, speak, think and believe as they will but it is equally clearthat they have no right to work for the State in the school system ontheir own terms. They may work for the school system upon thereasonable terms' laid down by the proper $tate authorities. If theydo not choose to work on such terms, they are at liberty to retaintheir beliefs and associations and go elsewhere. A teacher works ina sensitive area in a schoolroom. That their superiors have the rightand duty to screen them as to their fitness to maintain the integrityof the schools as a part of ordered society cannot be doubted.One's associates, past and present, as well as one's conduct, mayproperly bejeonsidered in determining fitness and loyalty."
But in 1 967, in Kayishian v. Board of Regents (5), the*U.S. SupremeCourt disapproved of the width of the ruling in Alder's case (supra).Justice Brennan delivering the opinion of the court said, referring tothe Feinberg Law and Alder's case (supra):
Subsection (2) was before the Court in Adler and itsconstitutionality was sustained. But constitutional doctrine whichhas emerged since that decision has rejected its major premise.
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That premise was that public employment, including academicemployment, may be conditioned upon the surrender ofconstitutional rights which could not be abridged by directgovernment action. That theory was expressly rejected in a series ofdecisions following Adler. In Sherbert v. Vemer. we said: 'It is toolate in the day to doubt that the liberties of religion and expressionmay be infringed by the denial of or placing of conditions upon abenefit or privilege.'
We proceed then to the question’of the validity of the provisionsof subsection (c) of section 105 and subsection (2) of section3022. barring employment to members of listed organizations.Here again constitutional doctrine has developed since Adler. Mereknowing membership without a specific intent to further theunlawful aims of an organization is not a constitutionally adequatebasis for exclusion from such positions as those held by appellants."
Justice Clark in the opening sentence of his dissenting judgment bringsout the change in direction and the radical nature of this ruling. Hebegan as follows:
"It is clear that the Feinberg Law. in which this Court found 'noconstitutional infirmity' in 1952, has been given its death blowtoday."
Dr. Cooray also relief on United Public Workers' Ltd. v. Mitchell (6).U.S. Civil Service Commission v. National Association of LetterCarriers (7) and Broodrick v. Oklahoma (8). This line of cases arebased on United Public Workers' Ltd. v. Mitchell (supra).
They dealt with the interpretation of what is called the Hatch PoliticalActivity Act 1940. This Act prohibited officers and employees in theExecutive Branch of the Federal Government from taking any activepart m political management or in political campaigns under penalty ofimmediate removal. Justice Reed speaking for the Court in the Mitchellcase (supra) said:
"The prohibitions now under discussion are directed at politicalcontributions of energy by Government employees. Thesecontributions too have, a long background of disapproval. Congressand the President are responsible for an efficient public service. If in
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their judgment efficiency may be best obtained by prohibiting activeparticipation by classified employees in politics as party officers or
workers, we see no constitutional objectionWe have said that
Congress may regulate the political conduct of Governmentemployees 'within reasonable limits,' even though the regulationtrenches to some extent upon unfettered political action. Thedetermination of the extent to which political ..activities ofgovernmental employees shall be regulated lies primarily withCongress. Courts will interfere only when such regulation passesbeyond the general existing conception of governmental power.That conception develops from practice, history, and changingeducational, social and economic conditions. The regulations ofsuch activities as Poole carried on has the approval of long practiceby the Commission, court decisions upon similar problems and alarge body of informed public opinion'. Congress and theadministrative agencies have authority .over'the discipline andefficiency of the public service. When actions of civil servants in thejudgment of the Congress damage the integrity and thecompetence of the service, legislation to forestall such danger andadequate to maintain its usefulness is required. The Hatch Act is theanswer of Congress to this need. We cannot say with such abackground that these restrictions are unconstitutional."
In U S. Civil Service Commission v. National Association of LetterCarriers (supra) the Supreme Court followed t^e above case andadded that the Hatch Act prohibitions were neither unconstitutionallyvague nor fatally over-broad. In Broodrick v. Oklahoma (supra) theSupreme Court was called upon to determine the validity of anOklahoma Statute which contained provisions similar to those in theHatch Act. The court followed the earlier decisions.
These American authorities are in accordance with the principlesenunciated earliej. These cases, unlike the ,present case, deal withparticular classes of employees in sensitive positic?hs in theGovernment where the very nature of their work requires limitations ontheir fundamental rights. Fundamental rights and freedoms we allknow are not absolutes. When they operate in a given context, theyare affected by the context and may take colouration from it. Whenfundamental rights undergo such restriction, it is not so much by theimposition of a limitation on them, but this happens when those rightsadjust themselves to that particular setting and environment. Such
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situations and context can differ from one category of job to another.
It would also be noted froijt the American cases and the Indian casesthat follow that the curtailment of the freedom of association arose insituations where the action involved was either criminal, such as theadvocacy of revolution, rebellion or violence, or the incitement thereofso as to bring it within the tests that the courts have formulated as'constituting a danger to the State and Society. It generally involvedboth sensitivity of job and a threat to the State and Society.
Now let me turn to the Indian cases relied on by counsel. InRamakrishniah v. The President, District Court, Nellore (9) the validityof a Government order requiring Municipal teachers not to join unionsother than teachers’ unions officially approved was challenged. TheMadras High Court declared the order void as it constituted anabridgement of the right of freedom of association guaranteed by Art.19(1) (a) of the Constitution. The court observed:
It is well established that the exercise of any of the fundamentalrights like the right of free speech, right of freedom of religion or theright of freedom of association cannot be made subject to thediscretionary control of administrative or executive authority whichcan grant or withhold permission to exercise such right at itsdiscretion. It is equally well established that there cannot be anyrestriction on the exercise of such a right which consists in aprevious restraint on such exercise and which is in the nature ofadministrative censorship. The guaranteed freedom cannot beabridged or abrogated by the exercise of official discretion."
Dr. Cooray however relied very strongly on the case of Balakotaiahv. Union of India (10). In this case appellants were employees in theRailway Department. The Railway Services (Safeguard of NationalSecurity) Rules 1949 enabled the Government to terminate theirservices at its pleasure. The Government terminated the services ofthe appellants under rule 3 of the said Rules on the ground that theyhad engaged themselves in subversive activities. Rile 3 was wordedas follows.-
"A member of the Railway Services who in the opinion of thecompetent authority is engaged in or is reasonably suspected to beengaged in subversive activities or is associated with others insubversive activities in such a manner as to raise doubts about hisreliability may be compulsorily retired from service or have hisservices terminated."
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The validity of this rule was not challenged as such, but the appellantssubmitted that the orders of termination were made because theappellants were members of the CommuniSt Party and trade unionists,and this was a contravention of their fundamental right of association.
The Supreme Court rejected this submission. It said:
"The notice, it is true, refers to the appellant being a member ofthe Communist Party or a trade unionist. But it is not the necessaryattribute either of a Communist or a trade unionist that he shouldindulge in subversive activities, and when action was taken againstthe appellant under the rules, it was not because he was aCommunist or a trade unionist but because he was engaged insubversive activities. We hold that the Security Rules are not illegalas being repugnant to Art. 14."
The Court next proceeded to deal with the argument that theappellant's freedom to form associations under Article 19 (1) has beeninfringed. The Court said:
"It is next contended that the impugned orders are incontravention of Art. 19 (1) (c) and are therefore void. Theargument is that action has been taken against the appellants underthe rules because they are Communists and trade unionists, and theorders terminating their services under R. 3 amount in substance toa denial to them of the freedom to form associations which isguaranteed under Art. 19 (1) (c). We have already observed thatthis is not the true scope of the charges. But a<bart from that we donot see how any right of the appellants under Art. 19 (1) (c) hasbeen infringed."
Thereafter the Court proceeded to add that the orders do not preventthem from continuing to be communists or trade unionists. Theirrights in that behalf remain after the impugned orders precisely whatthey were before. The Court added:
"The real co,mplaint of the appellants is that their services havebeen terminated, but that involves, apart from Article 311, noinfringement of any of their constitutional rights. The appellantshave no doubt a fundamental right to form associations underArticle 19(1j(c). but they have no fundamental right to becontinued in employment by the State, and when their servicesare terminated by the State, they cannot complain of infringementof any of their constitutional rights, when no question of violationof Article 31 1 arises."
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The Court of Appeal misguided itself when it took the latter part ofthis citation out of its context and thought that it contained the ratiodecidendi. This judgment, as I read it, does not carry therespondent's case any further. The constitutional freedom of right ofassociation does not stand in the way of. for example, disciplinaryaction being taken against an employee. The allegations against theappellants were that they were parties to subversive activities. Thereason the appellants chose to give themselves for the dismissals wasone of their own making and not the true one. But. on the other hand,if a person is a member of a lawful trade union which is engaged inlawful activity, a dismissal or disciplinary action solely on this groundwould certainly violate the constitutional guarantee. It was howeversought to interpret this case to mean that an employee can bedismissed for exercising his fundamental right of joining or being in aunion and that it would be a sufficient answer to an action challengingthe dismissal to say that the order does not in fact interfere with theemployee's right of association as this right still remains with him.Applying this argument to the facts of the present case, it is suggestedthat it would be legitimate to have a condition in the contract ofemployment against the employee joining a union and such acondition would not as such interfere with his right of associationbecause he will conjjnue to have that right and if he insists on it hemust seek employment elsewhere. This appears to me to be amisunderstanding of the language and a complete misreading of thecase Such an interpretation which strangely enough had appealed tothe Court of Appeal would, if given effect to. result in nothing less thanthis guaranteed right being wiped out altogether from theConstitution.
In 1 963 Jhe Indian Supreme Court in Ghosh v. Jobeph (11) gave aclearer exposition of the law. which leaves the matter beyond anydoubt. Rule 4.B of the Central Civil Services (Conduct) Rules (1955)laid down that no Government servant shall join or continue to be amember of any service association of government servants (a) whichhas not, within a period of six months from its formation obtained therecognition of the Government under the rules prescribed in thatbehalf or (b) recognition in respect of which has been refused or
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withdrawn by the Government under the said rules. These provisionshad to be read with the Recognition of Service Associations Rules1959. Gajendragadkar, J. said:
"It is not disputed that the fundamental rights guaranteed by Art.
19 can be claimed by Government servantsThus, the validity
of the impugned rule has to be judged on the basis that therespondent and his co-employees are entitled to form associationsor unions. It is clear that R. 4-B imposes a restriction oh this right. Itvirtually compels a Government servant to withdraw his membershipof the Service Association of Government servants as soon asrecognition accorded to the said association is withdrawn or if, afterthe association is formed, no recognition is accorded to it withinsix months. In other words, the right to form an association isconditioned by the existence of the recognition of the saidassociation by the Government. If the association obtains therecognition and continues to enjoy it, Government servants canwelcome members of the said association; if the association doesnot secure recognition from the Government, or recognition grantedto it is withdrawn, Goverment servants must cease to be themembers of the said association. That is the plain effect of theimpugned rule. Can this restriction be said to be in the interests ofpublic order and can it be said to be a reasonable restriction? In ouropinion, the only answer to these questions would be in thenegative. It is difficult to see any direct of proximate or reasonableconnection between the recognition by the Government of theassociation and the discipline amongst, and the efficiency of, themembers of the said association. Similarly, it is difficult to see anyconnection between recognition and public order."-(Vide also1963 A I R. Rajasthan 136.)
This case shows that this fundamental rights is subject to restraint interms of datee 4 of Article 19. Restrictions can be imposed in theinterest of public order or morality, but such interest must beproximate and direct.
It would be observed in both the American cases and in the Indiancase, the analysis of the law is on the basis that the impugned acts orprovisions constitute an invasion of fundamental rights and not as theCourt of Appeal Jn the present case has held that they fall within theexclusive domain of the private law of employment.
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The decision in State of Madras v. V. G. Row (12) dealt with asituation which was similar to that in the American cases. The StateGovernment was empowered &y legislation to declare any associationas unlawful if it constitued a danger to public peace or interfered withthe maintenance of public order. The impugned law required theGovernment to state in the notification the grounds for action andgave a right to the association to make representations against theorder. The law also provided for'an Advisory Board to hold an inquiryand report to the Government. The Supreme Court struck down thislegislation as being unfair mainly on the ground that the law made noprovision for judicial review. These decisions show how zealously isthe freedom of association protected by the courts.
The right of all employees (except a few prescribed categories) tovoluntarily form unions is part of the law of this land. It exists both inthe Constitution and in statute form. No employer can take away thisstatutory right by imposing a term to the contrary in a contract ofemployment. But of course where the State considers a restriction ofthis right is necessary for good cause, it is enabled to do so bysection 18(2) of the 1972 Constitution. Such a restriction can beimposed only by law and only for grounds set out in section 18(2) andno other.
This right of association is of great value and has varied scope. Itembraces associations^ which are political, social, economic andincludes even such entities as clubs and societies. But trade unionsenjoy pride of place. They play a significant role as an integral part ofthe democratic structure of government, and are a part of thecontemporary political and social landscapes. When Article 18( 1)(/) ofour Constitution speaks of the freedom of association, it meansprimarily the freedom of forming trade unions. Restraints or limitationson it would be permitted only in the most exceptional circumstancesand that could only be done by law in the interests of national securityor in the interests of law and order etc There may be some employerseven today who are against unionisation of labour. They may in allsincerity think that their factories or work places would be run muchbetter and more effectively without union interference. If the law wereto permit it, they would be ever ready, in the name of-order anddiscipline to prohibit unionisation of the workers by imposing such acondition in the letter of appointment. If the courts were to adopt theview of the Court of Appeal, we would be erasing Article 18(1)(f) of
SCGunaratne v. People's Bank (Wanasundera, J.)353
the Constitution and writing off trade unions and the trade unionmovement in this country which had. after a long and protractedstruggle fraught with great hardship and suffering, succeeded- ingaining this right and seeing it enshrined in the Constitution.
I am therefore of the view that the impugned clause in the proposedletter of employment is inconsistent with the guarantee of the freedomof association contained in section 18(1)(/)'of-the Constitution andconstitutes a matter of public law and not merely private.rights. •
The second objection o'n be’half of the respondent was thatviolations of individual right such as are alleged by the appellant in theinstant case are not within the purview of section 18(1) of the 1972Constitution. While the objection, had been formulated in the abovelanguage, what it means as Dr. Cooray explained in his submissions isthat the guarantee contained in section 18(2.) is only against Stateaction and violations by individuals do not come within its purview. Herelied on the provisions of Article 1 9 of the Indian Constitution.
Both Article 1 9 of the Indian Constitution and the correspondingprovisions of the present Constitution, particularly Article 126 (whichhas no equivalent in the 1972 Constitution) has come in forinterpretation numerous times. These may be of some assistance ininterpreting section 18 of the 1972 Republican Constitution.
Article 1 26 of the present Constitution enables a person aggrievedby executive or administrative action to com<* directly to the Court byway of petition. Although there had been some doubt both amongcounsel and even judges as to whether this was the sole and exclusivemode of approaching the courts for a violation of the fundamentalrights, it is now generally understood that this is only a special andsummary mode of relief in a particular kind of situation, namelyviolation of fundamental rights by executive or administrative action.Article 126 is therefore not exhaustive of the manner that courts couldbe approached for the violation of fundamental rights^ Article 1 26 isconfined to executive and administrative action. The ambit of thefundamental rights has a much wider range.
It would be seen from Article 1 2(3) of the present Constitution thatit contemplates possible violations of fundamental rights even byprivate individuals. So it is clear that fundamental rights are notinfringed only by executive or administrative action but go beyond theprovisions of Article 1 26.
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If we are to go by analogy with the Indian provisions on which Dr.Cooray relied, we find that his statement that Article 19 is directedagainst the State is correct. T8 compensate for any such limitations,the courts have been progressively extending the concept of State andtoday it has come to include almost any institution performing publicfunctions.
Indian courts have held that Article 19 "provides protection for thefreedoms and rights mentioned therein against arbitrary invasion bythe State" – Shamdasani v. Central Bank of India (13). Article 12 inChapter III containing Fundamental Rights defines the expression "theState" as follows:
"includes the Government, the Parliament of India and the
Governments and Legislature of each of the States and all local orother authorities within the territory of India or under the control of. the Government of India."
The words "other authorities" have given rise to a great deal of caselaw. Beginning with a somewhat restricted interpretation, the courtshave now discarded the eiusdem generis rule in this context and giventhe expression a much wider and extensive connotation. In ElectricityBoard, Rajasthan v. Mohan Lai (14), the Supreme Court held that theRajasthan Electricity Board would fall within the definition of "theState". The majority took the view that it was not necessary that thestatutory authority should be engaged in performing government orsovereign functions and that “other authorities" covered bodiescreated for the purpose of promoting the economic interests of thepeople.
In Sukhdos Singh v. Bhagat Ram (1 5), Mathew, J. was of the viewthat the public corporation is a new type of institution which has grownup from the new social and economic functions of Government. Hepointed out that institutions engaged in matters of high public interestor performing public functions should be regarded by virtue of thenature of the functions performed, as Government agencies and thatactivities which are too fundamental to society are by definition tooimportant not to be considered Government functions. These viewswere approved in Shetty v. International Airport Authority (16) In SonPrakesh Rekhi v. Union of India (17) it was held that the BhavatPetroleum Corporation registered as a company under the CompaniesOrdinance came within the definition of the word "State". In AjayHasin
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V/. K. M. Sehravardi (18) it was held that the Regional EngineeringCollege, Srinagar, administered and managed by a society registeredunder the Jammu and Kashmir Registrati»n of Societies Act was "theState" within the meaning of the definition.
It will be seen from the above decisions that the concept of Stateaction has been interpreted to mean something much .wider than theexpression "executive and administrative action" found in Article 1 26.
Turning to local cases,' in Wijeratne i/. The People's Bank (19), thecourt dealt with petitions under Article 1 26 of the presentConstitution. Officers of the Security Service of the People's Bankcomplained that due to a reorganisation of the Service they had beendiscriminated against. It was held that the People's Bank is a statutorycorporation. Numerous provisions in the .Act indicated the closeassociation of the Bank with the Government and Government controlof the Bank. For example, the Minister is empowered to appoint theentire directorate of the Board of Directors. The Minister can removethe Directors. Their remuneration is determined by the Government.The Minister nominates the first Chairman of the Board. Of the1 20,000 Rs. 50 shares, the Board has to allot 60,000 fully paid upshares tp the Secretary to the Treasury. Section 15 sets out theconsiderable amounts that have to be granted or paid to the Bank bythe Government. The Bank cannot commence business until it is soauthorised by the Minister and his Permanent Secretary is vested witha number of powers to enable him to act until th£ commencement ofbusiness by the Bank. Section 21 provides for Government guaranteesof loans and overdrafts. The Bank is also vested with certain powersunder the Agricultural and Industrial Credit Corporation Ordinance.
In Wijeratne's case (supra) we said-"A public corporation can for certain purposes serve as an agentor surrogate of the State. It all depends on the nature of itsfunctions, whether it is performing a governmental function or not, itmay happen that certain of its functions may be governmental,whilst the others may not. When a public corporation is performingits non-governmental functions itsactions do not have theattributes of State action or 'executive or administrative action'When the Bank performs its functions of redemption or acquisitionof land, under Section 71 of the Finance Act No. 1 1 of 1 963, it maybe urged with certain cogency that such action of the Bankconstitutes 'executive or administrative action'. But in this case, the
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petitioners were not employed.in the service of the Bank for theperformance of duties connected with the exercise by the bank of itspowers under the said section 71.
It is quite apparent from the material before us that the major roleof the 1 st respondent is in the commercial sphere and that its mainrole is that of a commercial bank. Such commercial activities of theBank cannot qualify as State actions. Having regard to the dutiesperformed by the petitioners it appears that the petitioners areemployed by the Bank in connection with their commercial activities.
In that perspective their employment in the Bank cannot be stampedas State employment. There is no nexus between the State and thebanking activities of the 1st respondent for such action of the Bankto be treated as that of the State. The State is not involved in thecommercial activities of the 1st respondent."
In the present ease we are not dealing with persons like securityofficers who may well be regarded as appendages to the normaladministrative structure. We are now concerned with an officer whomthe Bank itself has represented here as part of management. Suchmanagement would be pervasive of the entire work of the Bank and ifthe Bank performs any governmental functions this would comeequally under such management. In my view even under the presentConstitution the concept of State or Government is a wider conceptthan the expression "executive or administrative action".
Wijeratne's case*(supra) can be distinguished from the presentcase/ Here we are dealing with a different provision and a differentConstitution. In all the circumstances of this case I am inclined to theview that the People's Bank would constitute the State or theGovernment within the meaning of section 18 of 1972 Constitutionfor the purpose of maintaining a declaratory action for a violation ofthe fundamental rights under that Constitution.
The thirty and last submission made by Dr. Cooray was that theimposition of the impugned condition was valid under thatConstitution. He submitted that this was the prevailing state of the lawimmediately prior to the coming into operation of the Constitution andsuch "existing law" was not only continued and kept alive by theConstitution but section 18(3) goes on to say that it would havevalidity notwithstanding inconsistency with the provisions relating tofundamental rights.
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This argument is based on the assumption that the law prior to thecoming into operation of the Constitution permitted an employer toinclude a condition of this nature in a*letter of appointment. As Iunderstand it, the whole thrust of the trade union movement has beentowards freedom of association and a recognition of unionisation as amatter of a right. This pressure, which could not longer be resisted,brought in the trade union legislation, which gave .the workers abargaining power equal to that of the employers. As a corollary to thisright, the workers demanded non-interference by the employers intheir trade union activities, particularly such unfair practices like thesetting up of unions sponsored or inspired by them .and by otherdevices and manipulation so as to obstruct, interfere with and sap thestrength of the working class movement.
Both S. R. de Silva in his book The Legal Framework of IndustrialRelations in Ceylon and Abeysekera in Industrial Law and Adjudicationhave collated material on this point mainly from other countries. Mr.Silva's book contains the following passage at page 45:
"In Ceylon the right of persons to associate for trade unionpurposes existed in fact prior to its legal recognition in the TradeUnions' Ordinance. Since then, and subject to the limitationsalready noted, the liberty to form trade unions is subject only to therequirement of compulsory registration of trade unions. Althoughthere have been no statutory provisions to protect employeesagainst acts of anti-union discrimination by employers, a measure ofprotection has existed for some time in the form of industrial courts,arbitrators and labour tribunals which are entitled to give relief to aworkman who is dismissed or otherwise discriminated against byreason of his membership of a union. Further, a provision in acontract of employment that an employee will not join a union doesnot bind these labour courts which are empowered to grant relief inappropriate cases notwithstanding such a provision. The factualpicture, however, is somewhat different. While the better employershave recognised the right of employees to join unions*of their ownchoosing, there are employers who, even now, view unfavourably,unions and employees who join them. In Britain the IndustrialRelations Act (1971) secures to every worker the right to be amember of a trade union of his choice and makes it an unfairindustrial practice for an employer to prevent or deter a worker fromexercising such right or to dismiss, penalise or otherwisediscriminate against a worker for exercising such right."
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Abeysekera sums up the situation in the words thet'an order to desistfrom taking part in trade union actions is in excess of the employers'rights."
This argument too fails.
In the result I would allow this appeal and restore the judgment anddecree of the District Court. The appellant would be entitled to costsboth here and below.
SHARVANANDA, C.J. – I agree.
COLIN-THOME:, J. – I agree.
RANASIHGHE, J. – I agree.
TAMBIAH, J.-l agree.
Appeal allowed.